This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Renesas (6723 JP) ANOTHER Clean-Up Block Trade as Hitachi/NEC Exit
- Last November saw the clean-up trade of INCJ getting out of Renesas Electronics (6723 JP). That was 180+mm shares, well over-subscribed.
- Today we have news Hitachi and NEC are getting out of their stakes. That’s 123mm shares in an Accelerated Block Offering of about US$2bn. I expect it will go well.
- Recent gains in semiconductor stocks globally make this larger discount attractive. I expect a little heaviness but not much. There are index repercussions for international indices.
2. Renesas Electronics Placement – Another US$2bn Deal, Momentum and Index Weights Should Help
- Hitachi Ltd (6501 JP) and NEC Corp (6701 JP) aim to raise around US$2.1bn via a sell-down of their stake in Renesas Electronics (6723 JP).
- The stock has seen a number of deals over the past few years with the most recent one being a cleanup in Nov 2023, which did well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
3. Amer Sports (AS US) IPO: Valuation Insights
- Amer Sports (AS US) is a global iconic sports and outdoor brand group. Amer has launched an NYSE IPO to raise US$1.6-1.8 billion at a US$16.00 to US$18.00 price range.
- We previously discussed the IPO in Amer Sports IPO: The Bull Case, Amer Sports IPO: The Bear Case and Amer Sports IPO: Valuation First-Look.
- We revise our forecasts to reflect the FY23 preliminary estimates and long-term growth targets. Our valuation analysis suggests that Amer is fairly valued at the IPO price range.
4. Amer Sports IPO Valuation Analysis
- Amer Sports announced it plans to raise up to $1.8 billion at $16 to $18 per share, targeting a valuation of up to $8.7 billion.
- We estimate the company to generate revenue of $5.6 billion (up 23.5% YoY) and operating profit of $285.7 million (down 13.7% YoY) in 2024.
- We would pass on this IPO due to lack of valuation merits, highly leveraged balance sheet, and inconsistent profit margins, despite its solid sales growth in the past several years.
5. Brainbees Solutions (FirstCry) Pre-IPO – The Positives – Carving Its Niche
- FirstCry is looking to raise up to US$700m in its upcoming India IPO.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In this note, we talk about the positive aspects of the deal.
6. Amer Sports IPO – Deal Updates and Thoughts on Valuation
- Amer Sports (AS US) now aims to raise up to US$1.8bn in its US IPO. Proceeds from the listing will be used to pay down debt to the Anta-led consortium.
- Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
- We have looked at the company’s performance in our past note. In this note, we talk about valuations.
7. Frasers Centrepoint Trust Placement – Relative Large Dilution for Smallish Accretion
- Frasers Centrepoint Trust (FCT SP) aims to raise around US$152m in order to partly fund its purchase of an additional stake in NEX mall.
- The company had purchased its initial stake in the property nearly a year ago.
- In this note, we comment on the deal dynamics and run the deal through our ECM framework.
8. Thai Credit Bank IPO – Sentiment Isn’t the Best, but Valuations Aren’t Demanding
- Thai Credit Bank PCL (3674238Z TB) is looking to raise up to US$281m in its Thailand IPO.
- TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
- In this note, we will look at the updates since, undertake a quick peer comparison, and share our thoughts on valuation.
9. Brainbees Solutions (FirstCry) Pre-IPO – The Negatives – Not All of It Fits Together
- FirstCry is looking to raise up to US$700m in its upcoming India IPO.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In this note, we talk about the not-so-positive aspects of the deal.
10. Pre-IPO Shouhui Tech – The Business Outlook and Stock Price Performance Are Not Optimistic
- The essence of Shouhui’s business model is to “sell insurance” rather than provide services with technological attributes. So, Shouhui has relatively single business composition and lacks diversified sources of revenue.
- The trend of “disintermediation” is becoming increasingly evident, which may lead to customers deciding to purchase insurance directly from insurance companies not from Shouhui, resulting declining demand for Shouhui’s services/products.
- The business nature of insurance is incompatible with the Internet’s pursuit of rapid expansion. Cooling “Internet +insurance” investment in recent years proves the decline of market’s enthusiasm for this business.
